ORDER
Arun Mishra, J.
1. Question for consideration in these three writ petitions is whether the provision of Section 34(1) of The Recovery of Debts Due to Banks & Financial Institutions Act, 1993 (for short 'the Recovery Act') over-rides Section 20 of the Legal Services Authority Act, 1987 (for short 'the Act of 1987'), and matter, thus, cannot be referred by Debts Recovery Tribunal for recording compromise to Lok Adalat.
2. In W.P. No. 661/2002 petitioners submit that the case is pending before the Tribunal; civil suit was filed by Bank of India/respondent No. 1 for recovery of loan amount alongwith interest which was decreed in ex parte on 9-2-1998. Petitioners filed an application to set aside the ex parte decree. Same application was transferred to Tribunal and registered as M.A. No. 7/98.
3. In W.P. No. 662/2002 suit was filed by Bank of India for recovery which suit was transferred to Debts Recovery Tribunal at Jabalpur registered as O.A. No. 182/99.
4. In W.P. No. 663/2002 again Bank of India filed a suit for recovery of certain amount of loan alongwith interest which was registered as C.O.S No. 22-A/1993; it was transferred to Debts Recovery Tribunal and registered as T.A. No. 1040/98.
5. In all the three cases Bank of India accepted the offer made by the petitioners to compromise the matter; according to the which the petitioners will deposit the entire amount including the legal expenses; the legal expenses, if any, refunded by the Court will be credited to the petitioners' account.
6. Petitioners filed an application under Section 20(1) of the Act of 1987 before the Debts Recovery Tribunal, Jabalpur; that matter has been compromised between the parties as such for recording it the matter may be referred to Lok Adalat. On 14-9-2001, in all the three cases, Tribunal passed the order to dispose of the cases as the matter has been compromised between the parties and matter was consigned to the record room. Tribunal did not pass any order on the application of the petitioners for transferring the matter to Lok Adalat for recording compromise. Hence an application was filed on 9-10-2001 for hearing the matter afresh as no orders were passed on the application dated 28-8-2001 filed in all the three cases for transferring the matter to Lok Adalat. Tribunal by impugned order dated 11-10-2002 rejected the application on the ground that provisions of the Recovery Act has got an overriding effect on the provisions of Section 20 of the Act of 1987. Therefore, the applications were rejected. The Tribunal also relied upon the circular issued by the Reserve Bank of India to all scheduled and commercial banks of the country providing that the matter above the amount of Rs. 10 lacs should not be taken to Lok Adalat. The application filed on behalf of the petitioners was dismissed with cost. This order is Annexure P-7 in all the writ petitions. It is identically worded.
7. Mrs. Meena S. Chafekar, learned Counsel appearing for petitioners submits that the Tribunal has grossly erred in law in holding that the provisions of Section 34 of the Recovery Act overrides the provisions of Section 20 of the Act of 1987. The very purpose of enacting the Act of 1987 shall stand defeated in case the impugned order is allowed to stand and otherwise also the order is against the public policy with which the Act of 1987 has been enacted and the provisions of Section 34 of the Recovery Act nowhere overrides the provisions contained in Section 20 of the Act of 1987.
8. Learned Counsel Shri M.K. Mukherjee had entered appearance on behalf of the Bank of India. He states that Bank has absolutely no objection for referring the cases to Lok Adalat for recording the compromise.
9. Resistance has come from the Debts Recovery Tribunal to the petitioners' submission. Shri Rajesh Maindiratta, learned Counsel had entered appearance on behalf of the Debts Recovery Tribunal, Jabalpur/respondent No. 3, and a reply has been filed by Debts Recovery Tribunal that cases pending before the Debts Recovery Tribunal cannot be referred to Lok Adalat even with the agreement of the parties. The impugned order (Annexure P-7) in all the three cases is justified and call for no interference. It is further urged that petitioner can prefer and appeal before the Appellate Tribunal against the order (Annexure P-7). Thus, no interference is called for in the writ jurisdiction of this Court.
10. It is the consistent view taken by this Court that in the interlocutory orders passed by the Debts Recovery Tribunal, interference has not to be ordinarily be made in the writ jurisdiction of this Court as the interference at the interlocutory stages may frustrate and delay the decision of cases pending before the Debts Recovery Tribunal. This Court has consistently followed the decision of Punjab National Bank v. O.C. Krishnan and Ors., (2001) 6 SCC 569, in which it was emphasized by Their Lordships that the Recovery Act has been enacted with a view to provide special procedure for recovery of debts due to the banks and financial institutions. There is a hierarchy of appeal provided in the Act, namely, filing of an appeal under Section 20 and this fast-track procedure cannot be allowed to be derailed either by taking recourse to proceedings under Articles 226 and 227 of the Constitution or by filing a civil suit which is expressly barred. Even though a provision under an Act cannot expressly oust the jurisdiction of the Court under Articles 226 and 227 of the Constitution, nevertheless, when there is an alternative remedy available, judicial prudence demands that the Court refrains from exercising its jurisdiction under the said constitutions provisions. A Division Bench of this Court also in State Bank of India v. M/s. Shri Shyamji Sales and Ors., 2002 (1) MPLJ 221, following the decision of Punjab National Bank v. O.C. Krishnan (supra) has held that in the interlocutory orders passed by the Tribunal ordinarily no interference should be made under Article 226/227 of the Constitution of India.
11. In the instant cases, the facts are totally different. This Court is conscious of the fact that fast track procedure is not to be derailed but the question is of immense importance and jurisdictional significance whether the provisions of Section 34 of the Recovery Act overrides the provisions of Section 20 of the Act of 1987 and the cases pending before the Debts Recovery Tribunal even though the parties to the lis so desire cannot be referred to Lok Adalat. I proceed to examine the question on merit as it primarily involves jurisdictional aspect.
12. Section 20 of the Act of 1987 provides that where in any suit or other proceeding which is capable of being taken cognizance of by a Lok Adalat under the provisions of this Act and pending before any Court or Tribunal, if the parties thereof make a joint application to the Court or Tribunal indicating their intention to compromise the matter or to arrive at a settlement, the presiding officer or the Tribunal, as the case may be, may, instead of proceeding to effect a compromise between the parties or to arrive at a settlement himself, pass an order that the suit or proceeding shall stand transferred to the Lok Adalat for arriving at a compromise or settlement. There is non-obstante clause added which provides anything contained in any other law for the time being in force, cannot come in the way of such Court or Tribunal to pass an order for transferring the suit or proceedings to Lok Adalat for arriving at a compromise or settlement. Section 20 of the Act of 1987 is quoted below:--
'20 Cognizance of cases by Lok Adalats.-- (1) Where, in any suit or other proceedings which is capable of being taken cognizance of by a Lok Adalat under the provisions of this Act and pending before any Court or Tribunal, if the parties thereof make a joint application to the Court or Tribunal indicating their intention to compromise the matter or to arrive at a settlement, the presiding officer of the Court or Tribunal, as the case may be, may, instead of proceeding to effect a compromise between the parties or to arrive at a settlement himself, and notwithstanding anything contained in any other law for the time being in force, pass an order that the suit or proceeding shall stand transferred to the Lok Adalat for arriving at a compromise or settlement.
(2) Notwithstanding anything contained in any other law for the time being in force, the District Authority may, on receipt of an application from any person that any dispute or matter pending for a compromise or settlement needs to be determined by a Lok Adalat, refer such dispute or matter to the Lok Adalat for determination.
(3) Where any suit or proceeding is transferred to a Lok Adalat under Sub-section (1) or where a reference has been made to it under Sub-section (2), the Lok Adalat shall proceed to dispose of the suit, proceeding dispute or matter and arrive at a compromise or settlement between the parties.
(4) Every Lok Adalat shall, while determining any proceeding before it under this Act, with utmost expedition to arrive at a compromise or settlement between the parties and shall be guided by legal principles and the principles of justice, equity and fair play.
(5) Where no award is made by the Lok Adalat on the ground that no compromise or settlement could be arrived at between the parties, it shall be open to the parties to a suit or proceeding transferred from a Court or Tribunal under Sub-section (1) to continue such suit or proceeding before such Court or Tribunal, or if it is a dispute or matter referred to a Lok Adalat under Sub-section (1), any of the persons may institute a proceeding in an appropriate Court.
(6) Where, under Sub-section (5), the parties to a suit or proceeding intend to continue the proceeding in such suit or proceeding before the Court or Tribunal from which it was transferred, such Court or Tribunal shall proceed to deal with such suit or proceeding from the stage at which it was before the suit or proceeding was transferred to the Lok Adalat.'
13. It is clear from the provisions of Section 20 of the Act of 1987 that the provisions apply to any Court or Tribunal and it is a special enactment which contains non-obstante clause for transferring the matter to Lok Adalat.
14. Section 34 of the Recovery Act also makes a provision that the Recovery Act to have an overriding effect; Section 34 of the Recovery Act is quoted below:--
'34. Act to have overriding effect.-- (1) Save as provided under Sub-section (2), the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act.
(2) The provisions of this Act or the rules made thereunder shall be in addition to, and not in derogation of, the Industrial Finance Corporation Act, 1948, the State Financial Corporations Act, 1951, the Unit Trust of India Act, 1963, the Industrial Reconstruction Bank of India Act, 1984, and the Sick Industrial Companies (Special Provisions) Act, 1985.'
15. Bare reading of Section 34 makes it clear that the provisions of the Recovery Act has to apply in case there is anything inconsistent therewith contained in any other law for the time being in force. The submission of the learned Counsel for the Debts Recovery Tribunal is that since there is no provision of making a reference to Lok Adalat in the Recovery Act as such the applicability of Section 20 of the Act of 1987 is ousted and matter cannot be referred to Lok Adalat. Question is whether there is any inconsistency created if recourse is taken to Section 20 of the Act of 1987 and parties want to settle the matter amicably and want to record a compromise in Lok Adalat.
16. The object of the Recovery Act is to provide for the establishment of Tribunal for expeditious adjudication and recovery of debts due to banks and financial institutions and other matter connected therewith or incidental thereto. The Act applies to the transactions involving more than Rs. 10 lacs. It provides for constitution of Appellate Tribunal; Section 18 bars the jurisdiction of Court or other authority in relation to the matters referred to under Section 17. Section 17 of the Recovery Act provides that Tribunal shall exercise, on and from the appointed day, the jurisdiction, powers and authority to entertain and decide applications from the banks and financial institutions for recovery of debts due to such banks and financial institutions. Sub-section (2) of Section 17 deals with the power of Appellate Tribunal. Section 19 provides for filing of application to the Tribunal. Section 21 makes a provision for deposit of amount of debt due, on filing appeal. Section 22 deals with the procedure and powers of the Tribunal and the Appellate Tribunal. Principles of natural justice are applicable and subject to the other provisions of the Act and of any rules, the Tribunals and the Appellate Tribunal shall have powers to regulate their own procedure; they can receive evidence on affidavit. Chapter 5 provides for the recovery of debts determined by Tribunal; Chapter 6 contains the misc. provision regarding transfer of pending cases; over-riding effect; to make rules; appeal and savings, etc.
17. The Act of 1987 Sub-section (3) of Section 19 provides that Lok Adalat shall have jurisdiction to determine and arrive at a compromise or settlement between the parties to a dispute in respect of any matter falling within the jurisdiction of any civil, criminal or Revenue Court or any Tribunal constituted under any law for the time being in force in the area for which the Lok Adalat is organised. Section 19(3) of the Act of 1987 is quoted below:--
'19. (3) A Lok Adalat shall have jurisdiction to determine and arrive at a compromise or settlement between the parties to a dispute in respect of any matter falling within the jurisdiction of any Civil, Criminal or Revenue Court or any Tribunal constituted under any law for the time being in force in the area for which the Lok Adalat is organised.'
18. This power to effect compromise or settlement between the parties to a dispute is not to be found in the Recovery Act. Section 19(3) of the Act of 1987 takes into its ambit any matter in the jurisdiction of Tribunal constituted under any law for the time being in force. Section 20 provides that if a joint application is filed for referring a matter to Lok Adalat, duty is cast on the presiding officer of the Tribunal instead of proceeding to effect the compromise between the parties or to arrive a settlement himself notwithstanding anything contained in any other law for the time being in force to transfer the case to Lok Adalat. Thus, it is clear that when joint application is filed under the Act of 1987 matter has to be referred to the Lok Adalat and duty is cast on the Tribunal to refer it to Lok Adalat. I do not find any repugnancy or inconsistency which may be created between the operation of the two Acts if they are read together. I do not find any inconsistent provision in the Recovery Act which may debar referring of matter to Lok Adalat when both the parties have filed joint application. Section 34 read with Section 18 of the Recovery Act cannot be so interpreted so as to defeat the intendment of the Act of 1987. True it is that filing of frivolous application for referring the dispute to Lok Adalat may defeat the intendment of the Recovery Act, but in that matter it is for the Debts Recovery Tribunal to see whether it is a genuine joint application moved by the parties and whether compromise or settlement is possible or not. In case it has been arrived at between the parties and they want the matter to be referred to Lok Adalat, there is nothing in Section 18 or Section 34 of the Recovery Act which can be taken to a bar to such a recourse. The bar of jurisdiction under Section 18 of the Recovery Act is with respect to the filing of main cases before any other Court or Tribunal, but in my opinion, it does not bar the jurisdictional competence of Lok Adalat to record compromise or settlement by virtue of non-obstante clause contained in Section 20 of the Act of 1987; both Acts have to be harmonised. Initial jurisdiction to entertain an application lies with the Debts Recovery Tribunal; however, if the parties want to arrive at a settlement or would like to compromise the matter, there is nothing in Section 18 of the Recovery Act which prevents transferring of a case to a Lok Adalat under the said enactment the Act of 1987.
19. Public policy is that lis should come to an end and Section 21 of the Act of 1987 provides that award of the Lok Adalat shall be deemed to be a decree of a Civil Court or order of any other Court or Tribunal and where a compromise or settlement has been arrived at, by a Lok Adalat in a suit or proceeding transferred to it under Sub-section (1) of Section 20, the Court fee paid in such suit or proceeding shall be refunded in the manner provided under the Court Fees Act, 1870. In the cases of high valuation above Rs. 10 lacs which are entertained by the Debts Recovery Tribunal, amount of Court fees required to be paid is high. It was felt in the instant cases that if the Court fees is refunded by the Court that has to be credited to the account of debtor towards the legal expenses. There are cases in which parties agree to pay certain amount, but as the huge Court fees has been paid by the Bank becomes the hurdle in arriving at a compromise between the parties. Public policy is that lis should come to an end. With that objective the Act of 1987 has provided for Lok Adalats and as a bonus for arriving at a compromise, it offers refund of Court fees amount in the manner provided under the Court Fees Act, 1870. Refund of the Court fees is statutory recognised formula under Section 21 of the Act of 1987 which may sometime facilitate the compromise and make it easy.
20. In my opinion, Section 34 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 does not override the provision of Section 20 of the Legal Services Authorities Act, 1987. Both are to be read together and harmonise. The applications filed by the Bank can be referred to Lok Adalat if a joint application is filed and Tribunal is satisfied about its genuineness.
21. The next ground employed by the Debts Recovery Tribunal for rejecting the application is the circular issued by the Reserve Bank of India. Such circular cannot debar the reference of the cases to Lok Adalat if the Banks want to compromise the matter and want to obtain refund of the Court fees which can be ordered by Lok Adalat under Section 21 of the Act of 1987. Matter can always be referred to Lok Adalat; circular cannot have overriding effect on provisions of Section 20 of the Act of 1987.
22. Thus, the impugned orders (Annexure P-7) in each of the writ petition are quashed. The Tribunal shall refer the matter to Lok Adalat as the parties have arrived at a compromise and want it to be recorded before Lok Adalat.
23. Petitions are allowed. Cost on parties.